Supreme Court Hears First ACA Arguments

WASHINGTON -- During the first day of oral arguments on the landmark healthcare reform law, it appeared unlikely that a federal tax law will bar the Supreme Court from ruling on the case.

The Supreme Court kicked off its much-awaited oral arguments on the Affordable Care Act (ACA) with first hearing the one issue that both sides agree on. That issue centers on an 1867 federal law called the Anti-Injunction Act, which prohibits a lawsuit from being brought over a particular tax until that tax actually takes effect.

Under the ACA, everyone is required to have health insurance starting in 2014, or else pay a penalty in 2015. If the court were to decide the Anti-Injunction Act bars the issue from being heard now, the Supreme Court could postpone a decision on the controversial healthcare law until after 2015.

Both sides -- the Obama administration and the 26 states suing the federal government -- agree that the old tax law doesn't apply to the ACA and shouldn't stand in the way of a court ruling on the case, which is expected in June.

Most of the Supreme Court justices who asked questions during the 90-minute arguments Tuesday morning seemed to indicate that they didn't think the penalty levied on those who don't purchase health insurance amounts to a tax.

Since both sides are in agreement on the issue, the Supreme Court appointed a lawyer, Robert Long, to argue that the Anti-Injunction Act does apply. The arguments by Long and the other attorneys were watched by hundreds of viewers in the packed courtroom, including several lawmakers and HHS Secretary Kathleen Sebelius.

"The Anti-Injunction Act imposes a 'pay first, litigate later' rule that is central to federal tax assessment and collection," Long argued. "The Act applies to essentially every tax penalty in the Internal Revenue Code. There is no reason to think that Congress made a special exception" for the Affordable Care Act, he said.

The other lawyers disagreed.

"The purpose of this lawsuit is to challenge a requirement -- a federal requirement to buy health insurance," argued Gregory Katsas. "That requirement itself is not a tax. And for that reason alone, we think the Anti-Injunction Act doesn't apply."

Katsas is representing the National Federation of Independent Businesses, which, along with the 26 states and several individuals, filed the original lawsuit.

"This case presents issues of great moment, and the Anti-Injunction Act does not bar the court's consideration of those issues," said Solicitor General Donald Verrilli, who argued on behalf of the Obama administration.

Associate Justice Stephen Breyer seemed to agree with Katsas and Verrilli when he said that just because something is collected in the same manner as a tax, "doesn't automatically make it a tax."

"They called it a penalty and not a tax for a reason," he said, referring to the congressional authors of the ACA.

Associate Justice Elena Kagan also said that if Congress had intended the Anti-Injunction Act to apply to the ACA, then it likely would have written that into the law.

While the Obama administration took the tack of arguing that the penalty is not a tax for Anti-Injunction Act purposes, it's expected to argue Tuesday that it is in Congress' power to require everyone have health insurance in part because of its ability to tax.

"Today you are arguing that the penalty is not a tax," said Associate Justice Samuel Alito. "Tomorrow you will be back and arguing that the penalty is a tax."

Former White House adviser Ezekiel Emanuel, MD, of University of Pennsylvania, who spoke to reporters from the steps of the Supreme Court following Monday's arguments, said he thought it was clear the justices don't think the Anti-Injunction Act applies.

One appeals court -- the Fourth Circuit Court of Appeals -- has previously ruled that the Anti-Injunction Act does apply to the law.

Oral arguments continue tomorrow and Wednesday, where the real meaty topics will come into play.

Or, as Ron Pollack, a major supporter of the healthcare reform law and president of Families USA, put it, "This [Monday's argument] is an hors d'oeuvre and the rest is the main meal."

Oral arguments will last six hours total -- the longest time the Supreme Court has allotted for oral arguments on a particular case in 45 years.

The sidewalk in front of the Supreme Court was packed with both supporters and protesters holding colorful signs flapping in the gusty winds. The oral arguments have been much awaited by many in Washington and beyond.

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